Goldcorp (GG) Stock Retreating as Gold Prices Hit a Two-Week Low

NEW YORK (TheStreet) -- Shares of Goldcorp Inc  (GG) were retreating, lower by 4.86% to $17.44 on heavy volume in afternoon trading Tuesday, as gold prices decline on a stronger dollar.

Spot gold reached a two-week low of $1,185.35 an ounce earlier today, and was last down 1.64% to $1,187.06 an ounce as of 2:01 p.m. ET today.

U.S. gold futures for June delivery was similarly down 1.51% to $1,185.80 an ounce as of 1:51 pm. ET.

The dollar is gaining following strong U.S. data and recent comments from Federal Reserve Chair Janet Yellen that interest rates will be raised this year, according to Reuters.

A stronger dollar makes gold more expensive for holders of other currencies, Reuters noted.

Data showed that U.S. business investment spending plans rose for a second straight month in April, Reuters added.

About 7.68 million shares have changed hands as of 2:04 p.m. ET today, compared to its average trading volume of about 7.37 million shares a day.

Canada-based Goldcorp is the world's biggest gold producer by market value, and is engaged in the operation, exploration, development and acquisition of precious metal properties in Canada, the U.S., Mexico and Central and South America.

Separately, TheStreet Ratings team rates GOLDCORP INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOLDCORP INC (GG) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 188.8% when compared to the same quarter one year ago, falling from $98.00 million to -$87.00 million.
  • Net operating cash flow has significantly decreased to $58.00 million or 78.75% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 25.58%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 254.54% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Metals & Mining industry and the overall market, GOLDCORP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 39.04% is the gross profit margin for GOLDCORP INC which we consider to be strong. Regardless of GG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GG's net profit margin of -8.55% significantly underperformed when compared to the industry average.
  • You can view the full analysis from the report here: GG Ratings Report

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